How the Family Savings Fund can support parents of #FirstGenKids

  • Many first-generation Americans support their parents or other close relatives.
  • Traditional financial planning doesn’t take this into account, so I’ve developed new tools for my clients.
  • I recommend building a Family Provident Fund for relatives so you always know what to give.

I was sitting across from a client at brunch and asked her if she had ever worked with a financial advisor.

She said “I have”.

“What is your experience?”

“Well, he looked at my budget and noticed that I send money to my brother regularly. He said if I just stop sending him money, I can save. It took two years to try to see one again.”

I have told this story in many workshops and in almost every workshop someone chimes in and says that this has happened to them too. Most financial planning does not meet the multigenerational needs of people of color.

Many first-generation Americans support parents and others

many of my clients They are #FirstGenKids. They are the first generation in this country, first generation college graduates, first generation with a high salary, sometimes all three. They are more likely to have student loan debt, less likely to have a history of home ownership, and more likely to send money for an entire generation. They are often the first in their families to get the chance to make a fortune for generations.

My parents are immigrants, but we were lucky in many ways. My mom came here through a Filipino nursing program and it was a stepping stone to higher paying work and benefits. My father had a college degree in the Philippines, which was not valid when he immigrated, so he stayed at home.

They have been homeowners since long ago in my memory, allowing us to be financially stable throughout my entire childhood. There was no hint that going to college meant I would support them when I got my first job. I managed to get a degree in literature without feeling guilty. Not having the pressure to find a high paying job is a privilege for which I am still grateful. Many of the first generation do not have this experience.

The most common financial challenge for many of my first generation clients was how to take care of other family members while also taking care of themselves. I’ve had clients who cover their parents’ rent, are responsible for the family’s phone plan, and “the money person” in family emergencies.

They used their personal savings to cover these costs and did not keep track of how much they were spending for their families. They came to me feeling annoyed by these financial obligations, but they also expressed that one of their values ​​was the ability to provide for their families.

This is where I recommend the Family Provident Fund.

How does the Family Provident Fund work?

The Family Savings Fund is a simple yet powerful tool that allows you to give to family members, set personal boundaries, and make room for your family’s values.

First, select a regular amount that you can send to your family. It can be a monthly or yearly amount that you feel comfortable giving up.

Then open the file saving account (Feel free to call it a “Family Provident Fund”) and set up regular transfers to this account. If you have an annual amount, divide it by 12 to find your monthly contribution.

Most likely, family members will come to you at the last minute for help because they really You don’t want to be a concern. Setting up a family provident fund means you can plan for these unexpected contingencies. You don’t know when you’ll need to click on it, but it will be there when you need it – and they are -.

This fund also gives you a clear streak in the sand when you can’t support your family – if there’s no money in the account, you can say no and create that limit until you build up the reserves again.

When my mother-in-law needed extra financial support, we started sending her $300 per month. About a year later, she said she no longer needed it because she was able to make ends meet.

We started redirecting $300 a month to a savings account named after her. She came to us if she needed her brakes fixed or new furniture. We even used her savings fund to help her move into a new apartment.

The Family Savings Fund has given many of my first generation clients (my family included!) peace of mind in a way that aligns with their values. You can give back to the loved ones who helped you get this far and make sure you can take care of yourself and the next generation.